The Feldman File covers eBooks, publishing, new media, Internet services, consumer electronics and salsa dancing. (Okay, not salsa dancing, but it'll be interesting to see how many people looking for information on salsa dancing end up here.)

Friday, July 29, 2011

The TechWeek conference that I wrote about earlier this week included a startup weekend event. At a startup weekend, a group of aspiring entrepreneurs propose ideas to turn into businesses over a weekend (typically, 50 hours). The first step is to whittle the list of ideas down to 10 or so, and then the participants whose ideas weren't chosen join the teams whose ideas will be pursued. For the remaining time, the teams flesh out the ideas, talk to customers and write code. At the end of the weekend, the teams present their startups to a group of judges (typically, angel investors, venture capitalists and other entrepreneurs).

Startup weekends have a lot of problems, but the biggest one is that they turn startup creation into a game played over two days that can be won. That's not how startups work, and startup weekends trivialize the process while focusing on things that the team members already know how to do.

I sat in on the presentations at TechWeek's startup weekend. The demonstrations of working code were very basic, when there was any working code at all, and by and large, the "customer interviews" turned out to be nothing more than a collection of market size statistics gathered through Google. Jason Cohen, in his "A Smart Bear" blog, wrote some advice for startup weekend participants, and he pointed out that the goal should be figuring out whether or not you've identified a viable business opportunity, not demonstrating your ability to code:

You and I know you can code an app and produce a simple clean home page.
Everyone here can. So the quality or quantity of that creation will not
be why your company succeeds.

Cohen makes some excellent suggestions about what startup weekend participants should try to accomplish, but his key recommendation is to get out of your comfort zone. Developers are excellent at writing code, but they tend not to be as comfortable with talking to customers or identifying business models.

With that in mind, here are two suggestions for alternate startup weekends that could be more valuable in the long run for their participants:

Customer Development Weekend: As with current startup weekends, participants propose product and service ideas and whittle them down to 10 or so. Each team then figures out how to present its concept, writes a questionnaire and starts interviewing potential customers. The team must interview at least five potential customers face-to-face. It then takes the customer feedback from the interviews and uses it to either modify the original concept, or discard it in favor of a new concept, which then has to be retested. Once the concept is solidified, the team considers and selects one or more business models, and develops arguments for why the model (or models) will work. Finally, the teams present their concepts, along with the interview research to substantiate them, and their business models.

Building Strengths Weekend: It starts with the same process of coming up with a list of 10 or so product and service ideas, but then the team members work on the areas where they need the most help. The developers are responsible for getting out and talking with customers. The businesspeople with no programming experience learn how to program enough to build a skeleton of the concept. Everyone learns by doing. The final presentations show what the teams accomplished, and what they need to work on in the future.

The goal of starup weekends should be to learn what you don't know, rather than do the same thing on the weekend that you do during the week. If the objective is learning rather than winning a prize, the competitive aspect does more harm than good.

Monday, July 25, 2011

TechWeek, a week-long group of conferences, meetups and social events for the Midwestern startup community, is going on in Chicago. midVentures, a consulting firm and conference organizer based in Chicago and San Francisco, organized TechWeek. The actual TechWeek Conference began last Friday and ends tonight, but additional partner events will take place through Thursday, July 28th.

The first-day crowd was far beyond midVentures' expectations--more than 1,500 paid attendees, with five times as many people registering at the door as the organizers expected. The demand was so great that they ran out of badges on Friday and had to rush to print more in time for Saturday morning. The event was held at Chicago's landmark Merchandise Mart, the biggest building in the world when it opened in 1930, and still a very impressive structure. The Merchandise Mart has its own El (elevated train) station, food court and retail shops, as well as the hundreds of private merchandise showrooms for which it's known. It also has three floors of meeting and event space, and TechWeek took over one of the three floors.

The speakers that midVentures lined up were first-rate, and in the sessions I attended, there were very few sales pitches--the emphasis was on practical knowledge for developers and businesspeople. Here's a list of some of the better-known speakers:

There were a number of local investors making keynote speeches and on panels; perhaps the best-known, at least locally, was J.B. Pritzker, Managing Partner of the Pritzker Group, founder of New World Ventures and a member of the family that owns Hyatt Hotels and TransUnion. However, with the exception of Dave McClure, there wasn't much participation from the Silicon Valley angel and VC community, nor was there much interest from the New York or Boston investment communities. That has to change in a big way for Chicago to become a first-tier startup community.

One of the things that I noticed in the sessions I attended was that there were far more businesspeople than developers at the event, and most of the businesspeople had little or no idea how to find technical talent or a technical co-founder. An event to help match business and technical co-founders would have made a lot of sense, but it didn't make it onto this year's schedule.

There was clearly enough interest in this year's event to make a 2012 version a certainty, and there are a few things that I'd suggest to the organizers for next year:

The Merchandise Mart is a great location, but the sight lines in the two largest meeting spaces were awful. The stages were blocked by pillars from many places in the rooms. It would be better to have the presentations in better spaces within the Merchandise Mart, or if that's not possible, in conventional hotel conference rooms.

Rather than scheduling the midVenturesLAUNCH event in parallel with the final day of the TechWeek Conference, LAUNCH should be held on its own day, with no other events going on. The TechWeek events that I watched on Monday via streaming video were very poorly attended, due to LAUNCH going on at the same time.

There needs to be more presence from Silicon Valley, New York and Boston investors.

TechWeek was a very encouraging event for Chicago- and Midwest-based entrepreneurs, and I hope that it's a sign of much more to come.

Tuesday, July 19, 2011

By now, most of my readers know that Borders in the U.S. has given up on trying to find a buyer to keep its stores in operation, and plans to submit a liquidation plan to the bankruptcy court on Thursday. Despite Borders' management's claims, most of its wounds were self-inflicted: The company missed the key transitions in the book industry over the past several years. First, instead of investing in its own online presence, it partnered with Amazon and ended up sending traffic and revenue to the company that became its biggest competitor. (It eventually withdrew from the Amazon deal and created its own online store, but the damage was done.) Next, instead of building its own eReader and eBook infrastructure, it invested in Canada's Kobo and marketed its eReaders, as well as a mishmash of other models and brands. Kobo has only had a truly competitive eReader in the last two months, far too late to help Borders.

Now, at the 11th hour, Kobo is trying to get the bankruptcy court to give it a right of first refusal for repurchasing of Borders' share of the company. It's unlikely that Kobo's request will derail the liquidation plan. Assuming that the judge approves at least the retail store portion of the plan, going-out-of-business sales will begin in some Borders locations as early as Friday, with all stores expected to close by the end of September.

Beyond the loss of over 10,000 full- and part-time jobs, the biggest loss will be the closure of Borders' retail stores. No more than 50 stores are likely to be taken over by Books-a-Million and Barnes & Noble after Borders closes, and some areas will be completely without a local bookstore. Unlike Barnes & Noble, which built "cookie cutter" stores, many of Borders' locations are architecturally interesting, like its store in a converted movie theater in Palo Alto, CA.

Perhaps the saddest point is that Barnes & Noble's and Borders' aggressive discounting drove thousands of independent bookstores out of business. Now, Borders is closing, Barnes & Noble is struggling, and Amazon's strength makes it very unlikely that we'll see a renaissance of independent bookstores.

The August issue of Wired Magazine has an article by Chris Colin, titled "Rate This Article", that bemoans the impact of near-universal ratings on the ability of people to make their own decisions. I (mildly) disagree with Colin's belief that ratings interfere with the ability to make serendipitous discoveries--most people would prefer to avoid paying for a bad meal from a bad restaurant, or paying $40 to take their families to a lousy movie.

My concern is that we're increasingly being asked to rate everything, whether or not we have any interest in doing so. If you're an Amazon customer, sooner or later you'll receive an email asking you to rate a purchase. If you use Netflix, it sometimes feels as though you've been asked to rate every movie ever made. If you have your car serviced by a dealership, you'll almost always receive a survey from the manufacturer asking questions about the experience. Before you get the survey, however, your service manager, or whatever title the dealership uses, will implore you to give them the best possible rating on every question.

Most professionals who do surveys for a living, such as market researchers and sociologists, will tell you that there's a big difference between the ratings and reviews that people give without prompting (think Yelp) and those that they're asked to fill out, such as the car dealer's service survey. For most people, they're more likely to write a review or assign a rating for something that they feel strongly about, either positively or negatively. There's no point in giving a "meh" rating.

As for the car service survey, the manufacturer may as well throw the results out. The service manager has already biased your responses (you don't want to get them in trouble), so you're much more likely to give unreasonably high ratings unless something went very wrong. Was the floor of the waiting room so clean that you could eat off of it? Not likely, but you'll still probably give it an "Excellent" rating, so long as you didn't see roaches or rats.

I put more stock in the answers from respondents who choose to rate or review a product themselves, without being prompted to do so. The responses are more emotional, and thus tend to skew to very positive or negative, but they more accurately reflect the true opinions of the respondents at that moment. Note that I'm not including situations where people review products or services in return for compensation; those reviews should be considered biased unless proven otherwise. That's one of the problems with systems that reward reviewers based on the frequency of their reviews, such as Yelp and Amazon. Yelp, for example, throws parties and holds special events for its top reviewers, and Amazon awards special status to its top reviewers. These programs give reviewers incentives to write reviews for products and services that they don't feel strongly about, just to get more reviews posted.

On the whole, the "review economy" that we're living in is a good thing, so long as you consider the source, read the reviews carefully and look out for bias that goes beyond the norm (wild enthusiasm on one side and personal attacks on the other, or reviews that have been influenced by compensation).

Saturday, July 09, 2011

It's very difficult to live in Western society today without becoming cynical, or at least without seeing a lot of things as a "glass half empty". We have one universal language: Lies, and one universal religion: Money. Corporations, politicians, pundits and commentators lie so much and so often that it leads to deep cynicism--we expect our institutions to lie, and are pleasantly surprised when they tell the truth. Even the press, which we've relied upon for more than a hundred years to tell the truth, is regurgitating stories fed to them by PR flacks, avoiding stories that would alienate advertisers, using sensationalism to deflect attention from stories that are more difficult to tell and more important to understand, and spinning the news to the benefit of political parties or corporate interests.

The worship of money is very closely connected to the proliferation of lies. When there's no money at stake, there's no need to lie, but when the cost is high, it often costs much less to lie than it does to tell the truth and accept the consequences. Here are a few examples: Many energy companies and firms that either output greenhouse gases or make products that create greenhouse gases spend tens of millions of dollars in an effort to stop legislation designed to curb global warming. They hire lobbyists to convince legislators to block laws, underwrite bogus research that questions the impact of human activity on global warming, or even that global warming exists at all, and create "astroturf" groups to further inflame voters already panicked about the state of the economy.

Multiple pharmaceutical companies have been accused of suppressing research that found that their drugs may be unsafe. Health care organizations publicly supported U.S. reform legislation, but privately lobbied legislators against it and created their own "astroturf" organizations to try to defeat the legislation. The tobacco industry spent decades lying about the health effects of their products, and is now focusing on less-developed countries where companies can freely advertise to children and don't have to warn consumers about the risks of cancer and heart disease.

Banks and other financial institutions sold millions of mortgages to consumers who couldn't afford them, and then bundled the mortgages together and sold them (and their risk) off to others without detailing their shoddy quality. Companies pursuing high-profile mergers say and do everything they can to convince government agencies to approve the deals, and then backpedal on their commitments whenever they can once the merger is approved. Some corporations claim publicly that they're cooperating fully in civil and criminal investigations, while privately, they're destroying evidence that could be used against them.

Politicians, political appointees and staff members regularly go to work for lobbying firms hired by the same companies that they formerly monitored and regulated, at many times their governmental salaries. Some politicians are on a "Merry-Go-Round": They get elected, then after several years, move into the private sector as a lobbyist or corporate lawyer. A few years later, they make another run at public office. Their staffers often follow them, from public jobs to private, and back to public.

Journalists sometimes follow the same path, moving from a career reporting on companies to jobs in public relations firms, where they're paid by the companies and organizations they used to cover to pitch stories to other reporters and spin the facts. Of course, a reporter who's diligent in their efforts to learn the truth about individuals and companies that they cover isn't likely to get very many PR job offers, so there's strong pressure to run stories as they're pitched, and to not look under too many rocks.

Even with all these lies, all this gaming of the system, I maintain hope. Almost every day, I see organizations (primarily government-run and university laboratories, as well as start-ups) working on solutions to our energy and global warming problems. Some corporations recognize that global warming represents a bigger business opportunity than maintaining the status quo. As we get more existence proofs showing that we can maintain our standard of living while still decreasing greenhouse gases, the arguments of the companies and their paid advocates who say that it can't be done will be shown to be lies.

Our consumer protection systems continue to work, albeit often slowly and poorly. Some (but, unfortunately, not enough) of the abuses I wrote about above were detected by these regulatory agencies. Despite efforts to water down or eliminate many of these agencies, I believe that their value will ultimately be understood as essential for capitalism to be both effective and fair.

As "old media" companies find themselves in an ever-increasing spiral of sensationalism and irrelevance, new companies, large and small, for-profit and non-profit, are launching to fill the void. The Internet has eliminated the need for transmitters, printing presses and government licenses, and has decreased the cost by several orders of magnitude. Individuals can report as an avocation, and millions of them do, using their mobile phones, camcorders and personal computers. When you don't have to make a profit (or very much of a profit), it's very difficult for an "old media" company to kill you.

Even with all that, there are days when I just want to turn off my television, radio and computer, toss out the magazines and newspapers, and move to a cabin outside the range of modern media. There are just so many lies that I can take.

Monday, July 04, 2011

I've been reading the current issue of Mix Magazine, which covers the professional audio industry. I've read Mix for years, and it's one of my favorite trade magazines, but it's indulging in what I call "cut & paste journalism". It makes me doubt the independence and the veracity of what the magazine publishes. Here are a few examples:

In an article on sound for the movie "Transformers: Dark of the Moon", re-recording mixer Greg P. Russell is quoted as saying "We want to have a defined soundscape, so it's not just a wall of mess--it's very articulate, with a lot of detail and definition." Later on, he says "The movie is really big and bold, but it's not painful." The writer of the article, Matt Hurwitz, didn't challenge Russell on any of his assertions; in fact, the article is written as one big advertisement for the movie.

The problem is that almost every review of "Transformers: Dark of the Moon" comments on just how loud, painful and muddied the movie's sound is. It's possible that it sounded wonderful in the multi-million dollar mixing theater that Russell and his colleagues used, but it doesn't sound that way in real-world theaters. Mr. Hurwitz could have asked Mr. Russell about director Michael Bay's reputation for making his movies abusively loud, and what (if anything) Mr. Russell and his team might have done to fix things for this movie, but the question apparently never came up.

An article on "Ribbons on the Road", about using ribbon microphones, which are notoriously fragile, in the field, turned into an advertisement for Royer's R-121, R-122 and SF-24 microphones. Only one other vendor of ribbons, sE Electronics, is even mentioned. There are many other companies that make ribbons; are Royer's customers the only ones who made the editorial cut?

An article titled "Versatile Sound: New Loudspeaker Arrays for All Venues", is nothing more than a list of pull quotes from press releases and data sheets from more than 25 vendors. There's so little original writing involved that it doesn't even qualify for a byline. Would you like to know how the sound of these speakers compares? Interested in information on their manufacturing quality? Sorry, don't look here.

None of these examples includes the "New Products" section, which is also filled with quotes and pictures from press releases, with no editorial input except to shorten the releases for space. Yes, Mix does do reviews, but you have to look very hard to find one, in this or any other issue in recent memory, that suggests that you shouldn't buy the reviewed product.

I'm not saying that Mix's editorial standards are egregious; rather, they're representative of a wide range of trade publications that fill up far too many of their pages with editorial content that should more accurately be labeled as "advertorial", or simply as advertising. Journalistic standards and credibility in the U.S. are, by many measures, at an all-time low. Life is too short to waste it reading advertising disguised as an editorially-independent magazine.

Friday, July 01, 2011

The Los Angeles Times reported today that Google is in preliminary talks to buy Hulu. More precisely, as the newspaper reported in the very next sentence, Hulu's investment advisors have arranged to make presentations to Google, Microsoft and Yahoo, and probably any other company that has money in the bank. Whether Google is seriously interested, or is simply "kicking the tires", remains to be seen.

Hulu has a very nice technical platform and semi-exclusive distribution rights from its existing owners (Comcast, News Corporation and Disney), but it doesn't own any content. It has no permanent exclusive rights to anything, but it recently renewed its distribution rights with News Corp. and Disney. Comcast, which acquired part of Hulu when it acquired majority control of NBCUniversal, is prohibited by the terms of that acquisition from exercising any control over Hulu, so it's required to license its content to Hulu on the same terms and conditions as its other partners.

For Hulu to have any real value to Google or anyone else, the buyer will have to get Hulu's existing partners to grant semi-exclusive rights for much longer than three years. Most buyers would settle for a ten-year deal, but if Hulu's existing owners could take back the rights after just a few years, the company would have almost no value to an unaffiliated buyer.

If Hulu's current owners are willing to grant long-term distribution rights, an acquisition could happen fairly quickly. However, if, as reported elsewhere, Hulu's current owners and content partners are demanding that the company's distribution rights be renegotiated after the acquisition, it makes little sense for anyone to bid.

I give the company a lot of credit for making this offer, and I suspect that a lot of FCP and Avid users will take advantage of it. Of course, those people who purchased a slightly discounted upgrade to CS5.5 from resellers over the last few weeks may not be happy that they didn't wait for Adobe, and they may want to go back to their resellers to request a refund of the difference.

The sidegrade deal is available direct from Adobe through September 30, 2011. Even non-owners of Creative Suite (or people like me, who run CS on a Windows system, plus FCP on OSX) can get CS5.5 Production Premium for OSX for well under $1,000; those who qualify for upgrade packages will pay much less. It's an offer well worth considering, in that Production Premium also includes After Effects, Flash, Photoshop, Illustrator and Audition.